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Directors and corporate governance
July 18, 2009
Recently someone told me they were directed by an aging parent to sign corporate documents for audit waivers. They were assured it would be okay. This was a few years ago. Every year they sign these documents without asking any questions. They don't keep copies of the documents, returning the documents directly to the lawyers, they assume this was fine because the parent said so all those years ago.
To sign such documents, you must be a director or officer of the corporation, not just a minority shareholder. Might it be likely they are signing not only an audit waiver but approval of a waiver of the annual general meeting.
Who is in charge of the corporation? They have never been invited to a board meetings. This year they received dividends without any explanation. They don't know what shares they own, how many, what type as in common or preference, voting or non voting, or under what authority they are signing these documents. They don't know if the company is federally or provincially incorporated.
Wonder how often this happens in family business's? Probably more often than anyone cares to admit.
Here's one guide that explains the responsibilities of corporate directors in Canada published by Osler, Hoskin & Harcourt LLP in March 2009 which makes reference to tough economic times making decisions by directors more difficult and the potential for increased personal liability:
http://www.osler.com/uploadedFiles/Resources/Publications/8115_CorpGovCanada2009.pdf
Being the director of an NPO may be even more challenging in tough economic times. For all sorts of resources see my webpage at www.taxdetective.ca/nonprofitlinks.html
and Industry Canada's Primer for directors of NPO's:
http://www.ic.gc.ca/eic/site/cilp-pdci.nsf/eng/h_cl00688.html
Eileen Reppenhagen CGA does not research or endorse any product or service appearing in ads on this site. Before making any major financial decision(s) you should consult a qualified professional.
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